Lowe's to boost online biz, margins initiatives

NEW YORK (Reuters) - Home improvement chain Lowe’s Cos laid out a plan to step up its online business as more do-it-yourselfers take the online route to research and buy new home products.

At a meeting with investors and analysts in Mooresville, North Carolina, on Tuesday, the company announced plans to expand its product assortment online, launch a mobile shopping site next month and start an “ask & answer” service in early 2011 to better serve its online shoppers.

While most retailers for years have relied heavily on their Websites for sales, home improvement chains have seen their customers mostly using the sites to learn more about products before heading to a brick-and-mortar store to make a purchase.

The trend is changing, however, as both Baby Boomers, a big customer segment for home improvement retail, as well as younger shoppers increasingly scour Websites for bargains and get comfortable with the idea of buying home goods online.

“We know the consumer is changing,” Lowe’s Chief Executive Robert Niblock said on Tuesday, adding that shoppers want the “ability to shop Lowe’s wherever and whenever.”

“We recognize that the store experience alone is not enough for customers today,” he said.

Online sales are also often more profitable for retailers as they involve less overhead and other costs.

Lowe’s efforts to boost its online business come hand in hand with its other margins-driving initiatives such as offering more private label goods and installing new inventory management software to help individual stores keep better track of prices. It is also making structural changes to become more competitive on prices at a local level.

The company expects the efforts to help increase profits faster than sales in the near term.

On Tuesday, Lowe’s also backed its sales and profit outlook for its current fiscal 2010. Its shares were up 2 percent at $22.81 Tuesday on the New York Stock Exchange. Shares of its larger rival Home Depot were up about 0.3 percent at $30.53.

Lowe’s as well as Home Depot are focusing on boosting margins in the near term as they fight lackluster demand for expensive renovations in a slowly recovering U.S. economy.

A widely watched index of U.S. home prices showed prices of single-family homes in September fell more than twice as fast as expected from the prior month, while prices compared with a year earlier rose more slowly than forecast.

Lowe’s said it still sees earnings per share between $1.37 and $1.40 for the fiscal year ending January 28, 2011, reaffirming its outlook given earlier this month. That compares with Wall Street forecasts of $1.41 per share.

It also still expects sales at stores open at least a year to rise between 1 percent and 2 percent. It plans to open 42 new stores in all in fiscal 2010.